Pa. beer laws adding volatility to liquor debate

HARRISBURG, Pa. — Where you can buy beer in Pennsylvania will be the subject of debate in the coming weeks in the state Senate, pitting profit-seeking businesses against one another and perhaps even against beer drinkers’ wishes.

What do beer drinkers want? In Harrisburg, that story line is being told by a variety of businesses in the context of what lines up neatly with their would-be profits.

In the middle of it is Sen. Charles McIlhinney, R-Bucks, who chairs the committee that will get the first crack at a bill that passed the House last month. The first hearing is Tuesday.

The debate about adding consumer convenience to the beer system is largely a passenger in the drive by Republican Gov. Tom Corbett to privatize the state-controlled sales of wine and liquor.

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So any changes to Pennsylvania’s relatively restrictive beer laws likely will be part of the larger puzzle of liberalizing the sale of all alcoholic beverages.

“You’re trying to piece this all together,” McIlhinney said in an interview. “If everybody’s out to give themselves a leg up and make special interest legislation, then it’s going to fall apart. The only way to do it is to craft a fair playing field for everybody and let them compete.”

Arguably, beer is more important to Pennsylvanians: The state was fifth in the nation in beer shipments and 12th in wine shipments, according to statistics compiled by the Washington, D.C.-based Beer Institute.

Changing the system could be tricky.

Corbett is spending more of his political effort on the ideological battle around privatizing wine and liquor sales. But changing the beer system could take an equally large political effort.

Pennsylvania’s hometown brewers, wholesalers and the retail distributors who sell most of the beer in the state are largely aligned against an expansion of beer retailers. What Pennsylvanians want is to be able to buy beer in a wider variety of quantities than is currently allowed, they say.

But owners of convenience stores, grocery stores, drug stores, big-box stores and supermarkets are lobbying for the ability to sell beer — not to mention wine and liquor — in their aisles. That satisfies the one-stop shopping that consumers want and get in many other states, they say.

“It’s a big issue. It’s a volatile issue for many,” said David Casinelli, the chief operating officer of Pottsville-based Yuengling Beer Co. “There’s many stakeholders when it comes to alcohol in Pennsylvania.”

The balance of small brewers versus the nation’s biggest brewers, including MillerCoors and Anheuser-Busch InBev, also will play a role.

The existing system apparently has been good for smaller brewers: Yuengling, the nation’s sixth-biggest brewer, and the rest of the nation’s small brewers held a nearly 27 percent market share in Pennsylvania in 2012, according to Beer Marketer’s Insights of Suffern, N.Y. That’s more than three times their market share nationally, according to the publication’s figures.

Smaller brewers want a retail system that makes consumers happy but doesn’t allow wine and spirits to take shelf space away from beer, said Bill Covaleski, president of Victory Brewing Co. of Downingtown.

But allowing beer into the aisles of thousands of food or convenience stores also worries the smaller brewers. That’s because sales could migrate from distributors, which have ample shelf space to stock smaller brewers’ products, to limited store shelves that might largely stock Budweiser and Coors, they say.

McIlhinney said he is leaning toward a plan that would allow private beer licensees — eateries, bars and distributors, as well as supermarkets or convenience stores with a restaurant-style beer license — to buy licenses to sell wine and liquor.

Some could switch entirely to wine and liquor or stock none at all, McIlhinney said, while it would be up to the private market to put the state-controlled liquor stores out of business through competition.

Such a bill wouldn’t change the balance between craft brewers and the national beer brands, McIlhinney said, though it would force beer to compete with wine and liquor for shelf space. It also would address what he said he views as the biggest complaint from the brewers: Ensuring beer can get into the same stores as wine and liquor.

Keeping the same number of beer licensees — roughly 12,000 — likely would inflate the value of the licenses, while supermarkets, convenience stores and other retailers that want to sell alcoholic beverages would have to obey rules that have so far limited them to selling beer in settings that meet restaurant-style seating, food and space requirements.

Will beer drinkers be happy without beer in grocery or convenience store aisles? Maybe not, but they’ll also be pleased by the better selection and package varieties afforded by the distributors, McIlhinney said.